Brazil’s Spending Priorities Create Social Unrest

The sharp decline in economic growth during the FIFA World Cup was an unexpected result of the global event, but it was a result that many in the football mad country could weather. Many- but not most. Now that the event has passed, the country is experiencing an 11 billion dollar hangover. The massive layoff of scores of temporary workers is not helping matters either.

The sharp decline in economic growth during the FIFA World Cup was an unexpected result of the global event, but it was a result that many in the football mad country could weather. Many- but not most. Now that the event has passed, the country is experiencing an 11 billion dollar hangover. The massive layoff of scores of temporary workers is not helping matters either.

Inflated Hopes

Despite the country’s estimations that the massive influx of tourist dollars would be a boon to the local economy, it is projected that per US 2,500 dollars the average tourist spent, Brazil spent close to US 18,000 dollars. So, for an over 11 billion dollar price tag, Brazil purchased a 3 billion dollar economic influx. Worse, much of the revenue that landed on Brazilian shores was captured by FIFA or massive engineering and construction firms, opponents argue.

Related: The Economic Impact of the World Cup

Violent protests erupted in the lead up to the World Cup. Teachers and police officers went on strike demanding higher wages. Scores of protests over affordable housing and underfunded health care dominated the media. For those outraged by inequitable spending, rubber bullets and tear gas will remain the unofficial symbols of the World Cup.

The financial and social arguments are destined to continue as Brazil prepares to host the 2016 Summer Olympics. Some estimate a further 6 to 15 billion dollars (a low estimate considering the dramatic costs of past Olympic games) in infrastructure will need to be spent to prepare for the games.

A Period for Economic Gambling?

Strong economic growth since 2010 and a widely publicized expansion in the numbers of the middle class are indicators that Brazil deserves its reputation as one of the top 12 largest economies in the world. Though recent polls show GDP growth slowing as Brazil’s economy is still growing. Faith, though, may be misplaced as inflation rates skyrocket limiting the spending power of Brazilian citizens, and arguments about infrastructure investments take the forefront in political discussions.

Related: Brazil May Turn $280 Million World Cup Stadium into Prisoner Centre

Ostensibly, the nation is recovering from the global financial crisis in ways that other nations have not, but it is how public funds are allocated that continues to drive the social and political landscape. With the nearing October elections for president, Reuters reports that Brazil’s economic outlook may be bleak. Budget cuts and tax hikes are key issues facing whoever takes office in January 2015. 

Well, perhaps President Obama will give them another $2 billion for their oil as he did in his first term. This is $2 billion America does not have and it is on top of the fact that America is loaded in oil shale and natural gas but Obama’s Dept. of the Interior and EPA has made this energy hard to exploit.

Brazil Bit Off More than it can Chew

How then, activists wonder, can political leaders justify further, monumental, predominantly tax-payer funded spending on historically financially devastating enterprises such as the Olympics? Money that could go to repairing necessary infrastructure, such as the famously poor condition of Brazil’s roadways, is tied up in temporary constructions that fail to reap long term financial benefit. Speaking to NPR, Robert Barney, director of the International Centre for Olympic Studies at the University of Western Ontario, stated that

[QUOTE] “there has never been an Olympic Games that has made a profit.”  [/QUOTE]

Brazil will once again take the world stage as the games approach. As such, expect media coverage of the wild pageantry the nation’s leaders will hope to emphasize, but expect also rubber bullets and tear gas as civilians protest financial misappropriation.